by: Tim Bailey, Division President of Avid Ratings Canada
Building new homes means managing hundreds of processes while assembling thousands of components. Components are a combination of natural, manufactured, pre-fabricated and human-assembled elements. The construction process spans several months in conditions that may include scorching heat, drenching rain, gusting winds, frigid snow or anything in-between. It is not surprising that Dr. Jack Revelle, Six Sigma expert and quality guru, notes that “the average home has more than 60,000 points of failure during the building process” because building homes is not an easy sport.
Stopping at Third Base
In light of the complexities of home building, it seems reasonable to think that making it to closing with only a handful of items remaining as incomplete or deficient should be considered a victory. Unfortunately, homebuyers rarely look at what has been accomplished, but rather what remains incomplete when they receive the keys for their new home. A builder with a short list of deficiencies at occupancy may view that as a “win,” but most homebuyers score that less generously in customer satisfaction. “Stopping at third adds no more to the score than striking out. It doesn’t matter how well you start if you fail to finish,” according to major league baseball player Billy Sunday.
On the scoreboard of customer satisfaction, there are two key elements in play when homebuyers take possession of their new homes. The first element is the “number” of items that are deficient with the new home. The second element is how home buyers “perceive” that number of items. Even the best builders “leave runners on third base” at times, but customer satisfaction leaders score higher by managing customer expectations and also turning over homes with few, if any, deficiencies.
The Number of Incomplete Items
Survey data from the Avid Ratings “All-Canada” Database shows that 22.2 percent of homebuyers report having “three or fewer” deficiencies at the time of their pre-delivery walk-through, with 2.6 percent of those buyers reporting zero deficiencies. Hopefully the goal for all homebuilders is to have zero deficiencies by closing ─ or preferably by the pre-delivery walk-through ─ however this data suggests that 97.4 percent of home buyers report some deficient items at their walk-through.
In comparison, data from an industry-leading builder in customer satisfaction shows that 55.3 percent of their home buyers report having “three or fewer” deficiencies at their walk-through ─ 33.1 percent better than the “All-Canada” data above ─ with 6.4 percent of their buyers reporting zero deficiencies. A good batting average in baseball is typically above 300 and similarly leading builders are not perfect, but are batting at higher averages delivering deficiency-free homes.
Perception is Reality
Setting expectations for home buyers is a key factor in customer satisfaction, as customer perceptions become reality. Home buyer perceptions about deficiencies at the walk-through are important to monitor and understand. Survey data from the Avid Ratings “All-Canada” Database shows that 71.8 percent of home buyers believe the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items.” That leaves 28.2 percent of home buyers feeling that the number of deficiencies at their walk-through was “more than expected” or “much more than expected.”
Again in comparison, data from an industry-leading builder in customer satisfaction shows that 85.4 percent of their home buyers believe that the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items” ─ 13.6 percent better than the “All-Canada” data above. That leaves 14.6 percent of their homebuyers feeling that the number of deficiencies at the walk-through was “more than expected” ─ no home buyers reported “much more than expected.” Even the best builders are not hitting home runs every time they are at the plate when it comes to setting customer expectations, but they are generally leading the league in this area.
Managing the complexities of homebuilding should bring the reward of homeowners that are passionate fans, but this is only possible if customers receive complete and ready homes that align with their expectations. Turning over homes with few, if any, deficiencies shows up on the scoreboard through referrals and positive reviews. The finish is always the most important part of the race.
Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the home building industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at email@example.com.